Update to Boost Your Bottom Line
Are your company’s computers still running Windows XP? Does your fleet of vehicles date from the 1990s? Hanging on to outdated equipment or technology may seem frugal, but ultimately represents a drain on your company’s bottom line. At the same time, many company owners face real budget issues that cause them to hesitate on investing in new equipment. The key is to strike a balance between stretching the equipment you have to get a bit more wear versus knowing when it’s time to update. Fortunately, there are also money saving measures that will allow your company to obtain the up-to-date equipment you need without breaking the bank.
To Replace or Not?
In some cases, it’s obvious that equipment must be replaced. When the cost of repairing hardware or updating software exceeds the costs of replacement, serious consideration must be made for investment. However, in many instances, the decision to replace or repair must be made on a case by case basis, according to Colin Evran, founder and CEO of Yard Club, based in San Francisco.
“You have to ask whether replacement will provide incremental productivity. The big unknown is utilization. Will they (company owners) get use out of the equipment or will it be sitting idle?” Evran explained.
Potential savings realized through obtaining updated equipment must also be taken into account. Such benefits can help your company bid more competitively – yielding more contracts and a direct boost to the bottom line. On the other hand, hanging on to outdated hardware or technology could actually be costing your company money.
For instance, newer vehicles are often much more fuel efficient and require fewer repairs than older gas or diesel guzzling units. Updated software allows your company to process documents and files more efficiently or for your workers to perform more productively. By contrast, outdated computers and software may run slowly, crash frequently or be unable to process files received from outside the company.
Buy, Rent, Lease, or Share?
Once you’ve decided that new equipment is in order, there are still decisions to make about whether to purchase, lease or rent what you need. A rule of thumb for the construction industry is if equipment will be used at least 60 or 70 percent of the time, it makes sense to buy. Otherwise, it may be more prudent to rent or lease. However, in the not-too-distant future, the concept of shared equipment may alter that truism.
Companies located in California, Arizona and western Canada can already plug into the sharing economy through a San Francisco-based company called Yard Club. Yard Club operates as a facilitator between equipment owners and renters, providing a software platform clients can access through their computer browsers or through dedicated apps for iOS and Android mobile devices. Yard Club is designed for company owners who have invested in equipment that isn’t in constant use – and for businesses that occasionally need equipment but whose owners don’t want to rent or lease.
Through Yard Club, business owners who invest in costly equipment can maximize their return on investment by renting it out to pre-screened users. At the same time, companies that choose not to invest can still have access to current technology and efficient, well-maintained hardware, according to Evran.
“That’s the pain point we’re solving,” Evran said.
Evran learned about the construction industry from his contractor father. The idea for Yard Club came to Evran while he was enrolled in the Master of Business Administration program at Stanford University. He noticed the introduction of the sharing economy to other industries such as AirBnB for accommodations and Uber and Lyft for passenger rides, and decided to introduce the concept to the construction industry.
“Construction was one of the last industries to transition online,” he said.
Evran launched Yard Club in 2013 with approximately 1.6 million dollars in venture capital. So far, the response in the industry has been overwhelmingly positive, especially among younger contractors who are accustomed to utilizing technology in their daily lives according to Evran.
Business owners who do not participate in services like Yard Club can still take advantage of the principle of sharing equipment on a private level. Especially for expensive equipment, it could make sense to coordinate a schedule of sharing with one or more fellow business owners in the same area. Such an arrangement could provide the advantages of guaranteed access to the equipment a company needs while reducing the financial burden associated with purchasing equipment outright.
BECOME AN ACCA MEMBER